On March 29th, 2017, CBC Go Public was featured on the National with Peter Mansbridge. That program featured Larry Elford, a SIPA Advisory Committee Member, explaining the investment industry deception of the public by calling their commission sales representatives Advisors rather than Advisers as defined in Securities Acts.

That program also announced SIPA’s “Web of Deception” report, which is featured on the front page of SIPA’s website at http://www.sipa.ca. We consider that program the opening of Pandora’s Box. Since then, there has been more awareness by the media.

This simple deception, by a one letter change in spelling, facilitates the industry gaining trust and enabling them to harvest Canadians’ savings. How many people have been sold mutual funds or segregated funds by someone masquerading as a professional Advisor when in reality they were dealing with a commission driven salesperson with no legal liability to look after their best interests?

Now CBC has done it again.

CBC’s “This Hour Has 22 Minutes” ran a program on December 4, 2018. Part way through at the 11:50 mark, Mark Critch does a skit on the registration deception of the investment industry calling their commission sales persons ADVISORS to evade the responsibilities imposed on ASVISERS by Securities Acts.Here is the 1min and 48 second excerpt that all investors should see: https://www.youtube.com/watch?v=qH0UGSG2wX0

For the convenience of members, the segment on this deceptive practice has been extracted. Here is the 1min:48 second version. Feel free to add your comments. https://www.youtube.com/watch?v=qH0UGSG2wX0 In this segment Mark Critch explains clearly and concisely how the public is deceived by false titles and provides absurd comparisons to drive the message home.

Investors be aware that you are most probably dealing with a commission sales person. Check your statement for your representative’s title. If it is indicated as “Financial Advisor” you are dealing with a commission sales person even if he has better qualifications.

This is just another deceptive practice used by the industry and allowed by regulators.

Below is the latest reply to my concerns about systemic investment industry and regulatory ‘complicity’. About acts which, when they occur in concert, orchestrated between the self regulators (IIROC), government regulators (Provincial Securities Commissions such as OSC and 12 others) and the industry itself, serve to financially skirt rules and laws designed to protect the public. It carries the stigma or an organized system of abuse of the public when one looks closely enough, and asks questions.

THANK you for reading along and for any suggested solutions to such a well organized harvest of the Canadian investing public.

You have asked the OSC to investigate your concern about the titles used by two individuals registered with CIBC World Markets Inc. (CIBC WM).

The correct body to look at your concerns, in the instance you describe, is the Investment Industry Regulatory Organization of Canada (IIROC), since they directly regulate both CIBC WM and the individuals you have mentioned.

You should also contact IIROC for clarification about what titles can be used by an individual registered as a "dealing representative", and regulated directly by IIROC. Their contact information is available at this link: http://www.iiroc.ca/Pages/Contact-Us.aspx.

ASCSince you are in Alberta, and the two individuals you reference are in Alberta, you may also wish to contact the Alberta Securities Commission to see if they have any further information to provide to you. Their contact information is available at this link: http://www.albertasecurities.com/about/ ... ation.aspx

Previous CorrespondenceAs requested, I have attached copies of your previous correspondence with the OSC.

If I understand you correctly, it is not appropriate for persons who are registered as “dealing representatives” to advertise themselves to the public as “Advisors”, or “Advisers”, do I have that correct.

Further, if they market themselves as “Portfolio Manager”, they must be registered in the category of “Advising Representative”. Am I correct on that understanding as well.

Further, who would be responsible for oversight or regulation of marketing titles such as “vice president” or “First Vice President”, and are such titles allowed, appropriate or regulated in any way?

There is at least one public court case where it has been shown that sales brokers who used the “Vice President” title in their marketing were not actually in any executive Vice President position with the firm, but rather it was a title granted as a marketing reward to sales agents, and the judge correctly identified the title as a marketing ploy. I wonder if you or the OSC have any comments or direction on that title and its permitted useage?

Finally I wish to ask if the OSC is willing and/or able to investigate, act or do any thing with regard to this matter? I feel that the OSC is the proper body to bring forth this issue to, and I do hope that your agency has an interest and an ability to protect the public from marketing ploy’s which may be designed to deceive the public.

I thank for any help you can be, and if it is not too much to ask at this point, could you forward to me copies of my previous correspondence that you mention, forth and back, with the OSC. I would like to add/retain copies for my file.

Thank you for your email to the Ontario Securities Commission (OSC). You are concerned about individuals in the investment industry who you believe are misrepresenting their registration categories to give investors a false sense of trust.

You wrote that you recently noticed a financial team at CIBC promoting themselves on TV, radio, and web sites as if they were advisors, Senior Vice Presidents, and also Portfolio Managers.

You specifically refer to two individuals who are registered with CIBC Wood Gundy, which is a business name used by CIBC World Markets Inc. (CIBC WM). CIBC WM is registered in the category of Investment Dealer. As I believe you are aware, Investment Dealers are directly regulated by the Investment Industry Regulatory Organization of Canada (IIROC), a recognised self-regulatory organisation (SRO).

All individuals who are trading, and who are sponsored by firms registered as Investment Dealer, are registered in the category of "Dealing Representative". This is what you see when you look at the CSA website for categories of registration.

Advisers/AdvisorsAs mentioned in previous correspondence to you on this topic, the term Adviser is used in Ontario securities law to describe companies or individuals registered only to give advice about securities. The term “advisor” is not defined in Ontario securities law. The most common Adviser registration category is Portfolio Manager. Portfolio managers typically handle all the investment decisions for an individual’s portfolio, but they cannot carry out trades. All related trading activity based on the PM’s decisions would typically be carried out by an investment dealer.

Portfolio ManagerApart from the adviser registration category described above, portfolio manager is also an IIROC registration category and refers to registered representatives who have been approved for managing investment portfolios through discretionary authority provided by their clients.

For your reference, IIROC provides a list of IIROC approval categories on their website at this link: http://www.iiroc.ca/industry/registrati ... egories%22 <http://www.iiroc.ca/industry/registrationmembership/Documents/ApprovalCategories_en.pdf#search=%22iiroc%20approval%20categories%22> .

Senior Vice PresidentThis title is not a registration category. Many companies provide corporate titles that are separate from their registration categories.

What Investors Need to KnowWe have also mentioned to you in the past that business titles, designations for courses completed, and professional memberships may be informative, but for investors the important thing to know is the person's registration category. Regardless of a person’s business title or job description, their registration category will tell you what products they are permitted to trade or advise about, and the services they are allowed to provide. It is important to check registration with the appropriate securities regulator or SRO, or on the CSA website. For the individuals you’ve listed the appropriate SRO is IIROC.

You may wish to refer to a response I sent to you on this subject in an email dated May 11, 2015. My former colleague, Jeffrey Fennell, also corresponded with you on this topic, on several occasions. His most recent response was dated June 3, 2011.

IIROCYou may wish to contact IIROC, if you have further queries about the titles given to registered individuals that it directly regulates. Their contact information is available at this link: http://www.iiroc.ca/Pages/default.aspx <http://www.iiroc.ca/Pages/default.aspx> .

The information in this e-mail should be taken as a guide. The content is not intended to provide investment, financial accounting, legal, tax or other professional advice and should not be relied upon or regarded as a substitute for such advice. We recommend that you seek advice from a qualified professional adviser before acting on the information or content appearing in this e-mail or any information or content on a web site to which a link has been provided.

Dear OSC. I am concerned about persons in the investment industry who misrepresent their registration categories to give investors a false sense of trust.

I have recently noticed a financial team at CIBC heavily promoting themselves on TV, radio and web sites as if they were “advisors”, “Senior Vice Presidents” and also “Portfolio Managers”.

The CSA registration search shows them registered as “Dealing Representatives”, and I am confused as to how these other titles are allowed to be used. I am familiar with the representation rules (Ontario Securities Act sec 44) which seem quite clear about what constitutes representation or misrepresentation.

I am also inquiring about whether or not there are any “exemptive relief” decisions at the OSC on use of the title “Portfolio Manager”? I seem to recall seeing such exemptions in the past and I wonder if that might be the reason that a few persons are beginning to refer to themselves by this title.

Perhaps you could help me to better understand what, if any requirements there are in order to call oneself an “Advisor”, an “Adviser”, a “Portfolio Manager”, or a “Vice President, First Vice President” etc?

Here are the screen images for the specific team that brought this issue to my attention, however I have noticed groups at Richardson also using the “Portfolio Manager” terminology. Thank you for shining a light into any of my questions so that I can become more informed and understand what is being allowed to happen to investors.

You can purchase an exemption to any securities law in Canada, simply by paying a few thousand dollars in fees to the Securities Commission.

(the cynic in me would have to point out here, that a fore-runner to the above line is that the investment industry is already set up to get away with this by paying over $1/4 Billion to 13 Canadian provincial and territorial Securities Commissions, in what some people call an “off-book" government regulatory game.

Some examples from my memory:

#1Bombardier executives needing to dump millions of shares into a soft-declining market and not wanting their sales to alert the public. They apply to the Quebec Securities Commission for exemptive relief from the law on insider trading disclosure. Rubber stamp approval and secrecy and POOF! It is done$8 billion is wiped from the market value of Bombardier shares in about 30 days (with the help of these shares being dumped)$8 billion is the financial equivalent to over one million street crimes or property crimes in Canada…..done without a single eyebrow ever raised in Canada

#2Any bank, who is underwriting (selling a new investment issue) and who is worried that they may be “stuck” with unsold holdings in a soft market. What do they do to minimize this risk to the bank? They apply for an exemption to the laws of cross trading (my terminology). Those laws were written/intended partially to prevent banks from benefitting themselves and trading hot stocks into their own mutual funds or other account holdings. What those laws can also be used for is the reverse…..to allow the banks to DUMP crappy or poor selling investment underwritings INTO the mutual funds or other accounts of their customers. POOF! Any unsold or unwanted investments are no longer the bank’s problem, and who will ever know.

#3 When Valeant Pharmaceutical (VRX) learned that it could buy something called “exemptive relief” to securities laws in Canada, they probably loved the potential. The one exemption I found was an exemption which gave them permission to NOT HAVE TO FOLLOW FINANCIAL disclosure laws when making acquisitions. They could hide the financials and just tell people what they wanted to tell them….what could go wrong?A number of years later, VRX (name now changed) found cooking the numbers, execs charges with fraud (in the US) and a company which was at one time equal in value to THE ROYAL BANK OF CANADA….loses $90 Billion in market value…or shareholders and investors lose that much. That is the financial equivalent of hitting Canada with EIGHTEEN MILLION street crimes at an average of $5000 damage per. North America does not even count that many street or property crimes in a year….and yet off-book, government empowered regulators can assist companies to do this much…over and over.

#4 Hidden in the bowels of the securities commissions are approximately 500 such exemptions granted (sold?) each year. No public input. No public notice. not even a notice if YOU and your family purchased investments which were exempted from law. Nada

#5

Here, (in quotes) from memory is the entire sum of paperwork, disclosure or reported procedure on each ‘exemption’ I have seen since the 1990’s,

“Each of the decision makers is satisfied that the test contained in the legislation, to make the decision, has been met.”

#6 When $30 Billion of Sub Prime Mortgage investments (ABCP Asset Backed Commercial Paper in 2008) needed to be “dumped” and dumped fast, by people like National Bank and many others…but they were not highly enough rated to meet our laws……what to do? Apply for an exemption to our laws…and poof, dump them in retail investors accounts, dump them into the PPSP (pension plan for judges and RCMP) dump them into the Alberta Treasury Branch, in Nav Canada, and on and on. Lives ruined, a suicide or two, people taken down by alcohol to never recover….this was a financial hit equal to that done by SIX MILLION average property crimes. And the lady at the OSC who granted the exemption went from a $400k job at the OSC, to a reputed $600k job deeper within the industry….

And here is six minutes by Dr Gabor Mate, which surprisingly touches upon my topic (Financial Murder of Society by professional financial systems) from the perspective of one of the world’s most highly regarded experts on addiction: https://www.youtube.com/watch?v=NFPKpX9RxqsTitle, The Hungry Ghost Within

As a former “salesperson” employed in the securities industry, required by my employer to use the unapproved term “Investment Advisor”, I feel qualified to comment on the two issues raised in the Consultation paper.

The first involves the case of OEO’s (aka Discount brokers) selling a security that has a built in Legal obligation to provide unique services and personalized advice.

Clearly, an OEO (aka Discount brokers) cannot provide personalized advice under its registration so it should not offer A series mutual fund for sale. If it does, it should be sanctioned by the applicable regulator, IIROC.

IIROC has in fact determined that such sales are in breach of its conflict of interest rules and has guided that dealers make rebates to clients. IFIIC, the fund industry trade Association has publicly stated that the discount broker channel is wholly inappropriate for selling A series mutual funds. And investor advocates have urged regulators for years to stop this investor harm.

There is more than enough evidence therefore for regulators to order OEO’s (aka Discount brokers) cease trading in A series mutual funds There is no need for the CSA to use a convoluted approach as proposed to protect DIY investors to contain this mis-selling.

The real issue here is some ugly combination of deceit, overcharging, mal-disclosure, misrepresentation and conflict-of-interest.

This should not be viewed as merely a NI81-105 sales practice issue. It is a complete ethical breakdown that harms investors, the reputation of the marketplace and the financial services industry.

Of course, there are other harms caused by this financial assault on the retail investor. For example, certain fund companies have been denied access to the discounter platform because they have refused to pay the trailer commission to appear on the shelf.

There is also the question of deception. Fund Facts is very clear- the trailer commission is for personalized advice and, albeit unspecified, some services not provided as integral to the client account Agreement. This is a legal document as it forms part of the Simplified Prospectus for the mutual fund. OEO's (aka Discount brokers) cannot comply with this obligation yet they process trades and they do so without even warning that no advice or unique services can or will be provided. Is this not plain and simple misrepresentation? If so, why spin wheels talking about it; simply enforce the policy and penalize any firm that charges for services that it cannot provide.

The CSA has stated that there is approximately $25 billion of A series mutual funds with OEO’s. What is 1% of $25 Billion? Ans. About $250 million per year for ZERO advice for as long as OEO clients own the A series funds! Who pays this $250 million? Of course it’s the investor! Who benefits? Of course, the securities industry. And what is the OSC/MFDA/IIROC doing to correct this? Nothing? You mean this supposedly tightly controlled industry has done nothing to correct this?

CBC's Erica Johnson reports on an ex fund industry employee and his experience with OEO’s. Steve Pozgaj and his wife paid almost $5,000 in trailer fees last year, for advice he says he never got and that discount brokers aren't legally allowed to give. You have to see this video : https://www.cbc.ca/news/thenational/diy- investors-fight-back-against-trailer-fees-cbc-go-public-1.4826351

If regulators cannot protect investors given this arsenal of facts, there is something very wrong with our regulators.

It is absolutely shameful that the CSA is asking investors to comment on the blatantly obvious and not even issuing an Investor ALERT Bulletin warning investors of their inaction and failure to protect.

The second issue involves the controversial Deferred Sales Charge option in the sale of Prospectus qualified mutual funds. The vast majority of mutual fund clients aren't forthrightly told about the DSC/5% upfront commission and only find out about DSC's when they need to access some of their money or see the poor performance of the fund that was recommended to them and want out.

DSC sold mutual funds are an effective way for a fund salesperson and his/her employer to make a quick buck and handcuff their clients to them for 6 or 7 years. The loser, as usual, is the trusting investor.The CSA has, sadly, decided to retain embedded commissions but is now attempting to deal only with the most harmful strain, the DSC option.

Professor Douglas Cumming’s empirical research report on embedded commissionshttps://www.osc.gov.on.ca/documents/en/ ... 151022_81- 407_dissection-mutual-fund-fees.pdf demonstrates that investments under the DSC option have the least sensitivity to past performance out of all purchase options but nonetheless $241 billion dollars of assets under management were held in DSC funds (back-end and low load funds) at the end of 2015.This suggests massive mis-selling, locking clients into a fund for 7 years for no good reason instead of recommending no-load funds , the prevailing 0% FEL option, Index funds or low cost ETF’s.

Per MFDA Conflicts-of-Interest Rule 2.1.4”.. b. In the event that such a conflict or potential conflict-of- interest arises, the Member and the Approved Person shall ensure that it is addressed by the exercise of responsible business judgment influenced only by the best interests of the client and in compliance with Rules 2.1.4(c) and (d). c. Any conflict or potential conflict-of-interest that arises as referred to in Rule 2.1.4(a) shall be immediately disclosed in writing to the client by the Member, or by the Approved Person as the Member directs, prior to the Member or Approved Person proceeding with the proposed transaction giving rise to the conflict or potential conflict of interest”. If this rule was really being adhered to, it is inconceivable that proper business conduct would involve the sale of a DSC fund, especially to a family struggling to put away their modest savings for retirement or a senior/retiree. The sale of a DSC fund is not a shining example of proper business, it is pure deceptive, monkey business. As an aside, it was 19 years AFTER its 1998 adoption, that regulators finally took the first NI81-105 enforcement action!

Supporters of the DSC option state that it provides access to advice [albeit conflicted sales advice, not fiduciary advice] for small accounts. But consider this BCSC finding: “While respondents with smaller portfolios saw improvements to their general and specific fee knowledge in greater numbers than those with larger portfolios, they were by far the least likely to have taken any action – 65% of those with portfolios smaller than $50k have done nothing since the first CRM2 report, compared to just one-in-five of those with portfolios over $250k... Just 53% of respondents were satisfied with the value received for the fees paid. https://investright.org/wp-content/uplo ... iness-For- Better-Investing-Part-4.pdf This suggests that smaller investors are not taking action even when they understand the nature and size of the fees. Why would that be? The CSA should try to find out why and the associated investor protection implications. To not investigate this immediately raises important questions about the neutrality and professional integrity of the CSA.

The MFDA’s 2017 Client Research Report http://mfda.ca/wp- content/uploads/2017_MFDA_ClientResearchReport.pdf indicates it has identified seniors as a particular concern with respect to the mis-selling of DSC funds and that dealers may be using DSC commissions to finance the cost of their operations to mass market clients. In other words, DSC sold funds appear to be targeted at the most vulnerable investors. The MFDA Client research study continues: “Advisors with a book size of less than $2 million are most reliant on DSC commissions to finance their operations with 53% of their book in DSC funds. As advisor book size increases, the amount of DSC within the book decreases and mutual fund assets shift to FE and NE funds”. Elimination of the DSC option would therefore accelerate the switch to fee-based, direct pay arrangements, 0% FEL or no -load funds. It would also cause dealers to change their business models. That’s a good thing. To be sure, that would increase investor protection and decrease misalignment of interests.

Except for Fidelity and perhaps another firm, the MER of a DSC sold fund is identical to a FE load fund. If the true cost of the DSC series fund were calculated, it would be higher than the FE series. We see this in the Fidelity funds. As a result, the DSC cost structure is being subsidized by other unitholders. How is this fair?

It is ironic that industry participants are decrying a ban because it will limit access to advice for small investors while the Small Investor Protection Association, the voice of small investors, supports a ban of the DSC sold mutual fund. Perhaps self- interests are at play?

Given all the evidence of actual and potential harm to retail investors I recommend the DSC option be prohibited immediately. You have known for far too long about the dangers to investors of this option which benefits only the salesperson and the securities firm.

If anything, one could argue that your reluctance to take any action serves to demonstrate that regulatory capture occurred long ago.

To make the point with yet another example, why does the governing legislation state that the approved title was “salesperson” until 2009 at which point it was changed to “dealing representative”? I challenge you to send me one business card for each securities firm that uses the correct title.

Instead of using the legally mandated title, the employer provides business cards that state “investment advisor” or “financial advisor”. Why would this supposedly tightly regulated securities industry with the OSC and its SROs, the MFDA and IIROC, not have caught and corrected this misrepresentation of the title?

Why must the approved title be utilized at all times in every profession except for the securities industry? Why would the Real Estate Council of Ontario (RECO) punish not just the real estate salesperson but also the employing real estate firm, if any title not approved by RECO is used?

Can a lawyer say he/she is an attorney? No? Why not?Can anyone say they are a lawyer? Can anyone say they are a doctor or an architect or an engineer or...

Is it not a joke that the OSC/MFDA/IIROC allow titles to be used that mislead, misrepresent and which are not approved by the legislation? Whose interests are being served by this misrepresentation?

Think about it. It is certainly not the consumer that is being protected by this misrepresentation. Follow the money as they say and the money goes straight from the consumer/customer/investor to the industry! And where are all the lawyers and professional accountants who are well employed in the OSC/MFDA/IIROC who know first hand that you use the approved title or else major sanctions will be immediately imposed on your creativity?

Shameful conduct by the regulators of this “tightly regulated industry". Is the relationship not a bit too cozy, too tight? I mean when was the last OSC consultation with consumers? If memory serves me well, it was hosted at the CBC Toronto building years ago. What kind of balance and accountability is that?

Investment industry experts have begun to use the phrase “Off-Book Government”, to describe clandestine securities regulatory regimes in Canada, most of which are touted as being government supervised, legislated and operated, but in fact are intentionally separate and distinct from government oversights. They are even said by some to be kept beyond arms length as another layer of separation from government to protect the provincial ministers involved with each provincial and territorial securities commission.

Below are a few examples (from memory only) of Securities Commissions acting contrary to the public interest to unjustly enrich the financial industry who funds them, and influences their employment security. If true, they may form examples of Breach of Trust by public officials, Sec 122, Criminal Code of Canada.

If found to NOT be acting in good faith in carrying out their duties, the various provincial and territorial governments may not be able to claim immunity from civil suit against the commissions and governments. What if abused and/or victimized investors could not only seek criminal charges against regulatory officials, but could sue provincial governments to recover their financial damages.

The following quote from a case against the Law Society of Ontario sparked this contemplation of the wrongful abuse of the powers given to 13 Provincial and Territorial Securities Commissions. Acts which may demonstrate that the securities commissions are acting as industry funded “handmaids”, rather than as protectors of the public or of the public interest.

“The facts pled, if true, support the inference of an improper purpose. If true, they may point to a deliberate and dishonest wrongful abuse of the powers given to a public officer.”

1. Allowing fraudulent license-misrepresentation of over 100,000 Dealing Representatives (sales brokers/sales agents) who purport to Canadian investors to be registered as Advising Representatives (advisory agents). This is a false and intentionally misleading representation upon the public which lures the public into lowering their trust and natural suspicion about commission sales agents.

2. This is an example of willful blindness to Securities Act law, for the express benefit of the investment industry, and to the detriment of the public, who is kept unfairly mis-informed about their true financial services relationship.

3. Securities Commissions compound this unfair intent when they release (in 2017) new and supposedly improved Client Relationship Models (CRM2) which also avoid disclosure of the true, legal, license category of over 100,000 Canadian sales agents (Dealing Representatives).

Could any legitimate organization, acting in good faith, design a “Client Relationship” document which cleverly omits the clear, precise and specific details of what that actual relationship is?

4. Securities Commissions compound the complicity in the deception of the public when they alter documents and redraft procedures, rules, and materials to delete all reference to the word “Salesperson”. Including deletion of the word itself, by changing the name of the “Salesperson” category of investment registration to a name which is far less transparent and meaningful to the public, namely “Dealing Representative”. This removal of the clear and understandable description of “Salesperson” with the less clear and understandable term “Dealing Representative has the effect of further obfuscation of the truth and deeper confusion of the public.

More than three hundred employees at the Ontario Securities Commission earn in excess of $100,000.

More than 100 people at the Ontario Securities Commission earn in excess of what the Premier earns.

(Click to enlarge. This is the front page of the document where “Salesperson” terminology was cleansed from all use in 2009)

5. This (license misrepresentation) is also specifically forbidden in the Securities Acts of most, if not all Provincial and Territorial Securities Commissions. This means that Securities Commissions selectively ignore the very laws under which they are established by, and responsible for.

5. Providing, for a fee, exemptions to Securities law which allow Securities Act law to be skirted without public hearing, without public input and without a warning to investors who may be negatively affected, and whose public financial protection may have been removed from them, behind closed doors by the exemptions to laws.

6. Securities Commissions deliberately require “Know Your Client” (KYC) disclosure documents which can be easily ‘warped’ to protect the industry by having those documents completed with the “assistance” of false-advisors. At the same time, there is no such thing as a “Know Your Advisor” (KYA) disclosure other than the intentionally vague and misleading Client Relationship Model (CRM and CRM2) which completely avoids the disclosure that would warn and protect the public from commission sales agents who falsely represent their roles and registration categories to unjustly enrich themselves and their dealers.

I have found exemptions for nearly every bank in Canada, who when offering new issue underwritings for sale to the public, if ever these new issues do not sell well and if the bank if fearful of being “stuck” with a lead balloon investment holding...what do they do? Simply apply for exemption from the cross trading restrictions in the law between bank underwriting divisions, and bank mutual fund divisions, and dump the crap product off of the bank’s hands, into the hands of the investors in a bank mutual fund...problem solved.

for the CSA to turn a blind eye to 116,000 registered dealing representatives, who falsely portray themselves to the public in a manner intended to lead (deceive) Canadians into a false belief that they are dealing with “advising representatives”, and not dealing representatives (salespersons) is tantamount to an epidemic of systemic fraud upon Canadians.

Making payments to discount brokers for advice and undefined services is just plain wrong.Mutual fund boards should be held accountable for abuse of fund assets. Buying shelf space with fund assets is a breach of fiduciary duty. The Independent Review Committees should be asked if they were asked ABOUT this use of funds and if so, why did they agree for this money to leave the fund.?If they were not asked, the trustees are non compliant with NI81/-107. No matter how you look at it the root cause of this issue lies with the fund manager and that is who the CSA should be sanctioning.

As for the DSC issue, it has been known since 1998 when the Stromberg report was issued that the DSC sales option is hard-wired to be corrupted. As it is mainly middle income families exposed to the toxic DSC, the CSA should ban it as an abuse of the public and an unjust enrichment of dealing representatives.It is not a matter of investor choice since only financial illiterates would seek out an investment that locks them in for up to 7 years. Of course, a 5% upfront payment to the salesperson is irresistible but definitely not in the client's best interests. Once the DSC is prohibited, all fund MER's will drop and that's a good thing. Sales of the DSC should cease during the consultation period or at least any ban should be effective as of the date of the consultation.

Finally, for the CSA to turn a blind eye to 116,000 registered dealing representatives, who falsely portray themselves to the public in a manner intended to lead (deceive) Canadians into a false belief that they are dealing with “advising representatives”, and not dealing representatives (salespersons) is tantamount to an epidemic of systemic fraud upon Canadians.

The CSA appears willfully blind to this deception at best, and complicit to it at worst.It must be noted that Provincial regulators may be liable for breaches of the public trust if it can be shown they are/were not acting in good faith in their public protection capacity as government regulators. Letting Canadians be deceived, and financially abused, does not appear to meet the standard of acting in good faith.

Thank you for the opportunity to make comments. This letter may be publicly posted.Larry Elford

For the last two decades SIPA has heard from thousands of victims of financial industry wrongdoing and listened to their tragic stories of how this has negatively impacted their lives. From our many years of experience, we believe you have been given incorrect information that DSC's have been serving Canadians well.

Unlike the UK and Australia, Canada has retained embedded commissions. The CSA is only trying to prohibit the DSC sold mutual fund option with its outsized upfront commission locking investors in for 7years.

According to Stephen S. Poloz, Governor of the Bank of Canada the amount of debt held by Canadian households has been rising now for about 30 years. Canadian households owe over $2 trillion. The average Canadian owes about $1.68 for every dollar of income he or she earns per year, after taxes.

Advisors dependent on these quick and larger commissions that DSC’s provide are put into a terrible conflict of interest with their clients. Seniors as we know can have rapidly changing needs due to changes in their health and care needs. Yet we find seniors are particularly vulnerable to being taken advantage of in this manner since they are often the ones with savings. The penalties to access their own hard-earned savings when needed are heart- breaking.

Instead of locking any Canadian, young or old, into investments with DSC’s maybe we need to be encouraging more of them to pay down debt with any extra cash, or to put together a rainy- day fund. Many households do not have enough liquid savings to cover any emergency or unexpected expenses like a new furnace, roof, car repairs, or even if an appliance breaks down. To have their savings locked away is both unwise and unfair.

The DSC is being used by the industry to finance new fund salespersons. It is NOT about investor choice. Real choice for investors would be between retail advisors who are accountable to a fiduciary duty and accept no conflict-based remuneration and the current situation of working with a salesman! The DSC option is advisor choice and industry choice. You are presently siding with the financial institutional elite when the little guy needs those in power to demand accountability for this elite. The DSC is an aggressive remuneration option designed to get sales reps quickly established and the more they are willing to take advantage, the more important the DSC becomes. A new salesperson is not going to come into the business unless they can earn immediate money. Rather than through a DSC it would be better if a dealer paid a salary. If a dealer takes the risk of paying some base salary, logic dictates they would be far more engaged in the quality of the advisor they license. This would a better route.

The DSC poses several problems to the investing public. The DSC significantly increases overall investment management fees. Paying a 5% upfront fee to a sales person plus 0.5% per year leaves mutual fund managers with a large expense to recover prior to making a profit for themselves, this inevitably translates into higher fees borne by the investor. DSCs give the incentive for an advisor to work hard to get their new clients into an investment but leaves little incentive to do any work thereafter. Once they’ve committed to the investment the advisor has received the lion’s share of their compensation and arguably has little direct motivation to continue fostering his or her relationship with the client.

The DSC locks small unsophisticated investors into a mutual fund for up to 7 years. If the investments do not perform as anticipated, or a client has a legitimate need for cash, redeeming out of these funds is a costly move. Small investors have access to a number of other economical choices that would not be impacted if the DSC option were banned.

The financial industry has generated an image of advice and service when in reality it is based upon selling product. We have interviewed many victims and found that most of them knew very little about investing. They simply trusted their Financial Advisor to look after their savings. They truly believed that their advisor would and many believed this person had a fiduciary duty to do so. Sadly, this is not the case here in Canada. SIPA's report “Advisor Title Trickery” indicated 121,932 total registrants in Canada in the investment industry yet only 3% of those are registered in a category where a true fiduciary professional responsibility is legally required. The current suitability regime, loaded with conflict-of-interest, can hardly be called “advice”. But now it is being used as a basis to provide what is purported to be ever more fulsome financial advice and its deficiencies are glaringly apparent. Additionally, with an aging client population, fewer defined pensions being offered by employers and more defined contribution plans being part of the future, there is an increasing need for Canadians to have access to impartial professional financial advice that can be trusted is in their best interests.

One small step forward for small investors would be the elimination of Deferred Sales Charges. A larger much more needed step, is for advice givers to be held to the highest standard when handling Canadians hard-earned savings and their trust. Please reconsider your position and stand up for the interests of the little guy, not big corporations.

Sincerely,Stan I. Buell President

Investor Advocate Comment....

on the same day that I received the letter above from SIPA’s Stan Buell, I also received notice the Ontario Finance Minister Vic Fedeli was the guest speaker at the Advocis convention coming soon. Advocis is the epitome of self-serving financial services in my view, and for them to have obtained the ear of the Ontario Minister of Finance is saddening. Some history and track record of Advocis can be found on this site at this location:

Thank you for the opportunity to provide the CSA comments on this very important Consultation.

Making payments to discount brokers for advice and undefined services is just plain wrong.

Mutual fund boards should be held accountable for abuse of fund assets. Buying shelf space with fund assets is a breach of fiduciary duty. The Independent Review Committees should be asked if they were asked ABOUT this use of funds and if so, why did they agree for this money to leave the fund.?

If they were not asked, the trustees are non compliant with NI81/- 107 . No matter how you look at it the root cause of this issue lies with the fund manager and that is who the CSA should be sanctioning.

As for the DSC issue, it has been known since 1998 when the Stromberg report was issued that the DSC sales option is hard-wired to be corrupted. As it is mainly middle income families exposed to the toxic DSC, the CSA should ban it as an abuse of the public and an unjust enrichment of dealing representatives.

It is not a matter of investor choice since only financial illiterates would seek out an investment that locks them in for up to 7 years. Of course, a 5% upfront payment to the salesperson is irresistible but definitely not in the client's best interests. Once the DSC is prohibited , all fund MER's will drop and that's a good thing. Sales of the DSC should cease during the consultation period or at least any ban should be effective as of the date of the consultation.

Finally, for the CSA to turn a blind eye to 116,000 registered dealing representatives, who falsely portray themselves to the public in a manner intended to lead (deceive) Canadians into a false belief that they are dealing with “advising representatives”, and not dealing representatives (salespersons) is tantamount to an epidemic of systemic fraud upon Canadians.

The CSA appears willfully blind to this deception at best, and complicit to it at worst.

It must be noted that Provincial regulators may be liable for breaches of the public trust if it can be shown they are/were not acting in good faith in their public protection capacity as government regulators.

Letting Canadians be deceived, and financially abused, does not appear to meet the standard of acting in good faith.

I feel it is important for all to be made aware of an important part of the BCSC recent history. What should you expect from the conscience of a regulatory organization ?

What has been illuminated in the Blog raises questions about the efficacy of the BCSC operations. During this time period it appears that the Executive Director running the BCSC for 6-years (starting 2010) then moved on in 2016 to the Investment Funds Institute of Canada (IFIC) as President and CEO to then defend the interests of that side of the equation. The previous history of this BCSC Executive Director started out as BCSC Director of Enforcement for 2-years (1995-1997), then as OSC Director of Market Operations for less than 1-year (1998), then as IIROC Senior Vice President for 8-years (2001-2009) before rejoining the BCSC in 2010.

There is an inference here that needs to be considered. You might want to check out who are the members of the IFIC relative to the issues of concern in the blog.

Thanks to a clever ‘vowel movement’ by 13 provincial and territorial Securities Commissions, they can publish the following:

"The CSA also adapted and promoted videos to raise awareness about new requirements under the Client Relationship Model Phase 2 (CRM2) and related changes to how advisers must report to their clients on the costs, performance, and value of their investments.”

(While cleverly hiding from Canadians that 120,000 salespersons in Canada do not honestly disclose that they are neither licensed as “Adviser” nor “advisor”. They are merely misrepresenting salespersons as “advisors” in most cases, (96% in Canada) while unsuspecting investors trust them as if licensed in a professional adviser capacity.)The Securities Commissions act in breach of the public trust by concealing these illegal representations from Canadians.

For this reason (intentional license concealment), some financial experts refer to CRM2,the much lauded “Client Relationship Disclosure Model” a CRIME2. Can you imagine a client relationship disclosure document in which the license, registration, job role and protective agency duty (or lack of) is intentionally concealed from millions of investors.

This post is a collection of salary and administration costs for financial and investment regulators in Canada. Any agency claiming to have a role in protection of the public interest will be added here, (in due time).

Page 39 shows that IIROC held $90 million cash, investments and other in 2016.

Page 41 shows they collected $60 million in fees in 2016.

Page 41 shows they spent $84 million to operate in 2016.

Page 53 shows that the Canadian Investor Protection Fund (CIPF) contains a total balance of $464,376 on hand, plus lines of credit provided by two Canadian chartered banks totaling $125,000 as at December 31, 2015.

(The Organization is the sponsor of the Canadian Investor Protection Fund (CIPF), which was established to protect clients who have suffered nancial loss due to the insolvency of a dealer member of IIROC.)

This Administrative Notice provides a summary of the 634 exemptions granted in 2015

3.1 Authority to Grant ExemptionsIIROC staff is permitted, under specific Dealer Member rules, to provide exemptions in specified circumstances where IIROC staff is satisfied that doing so would not be prejudicial to the interests of the public, the Dealer Member or its clients.

4.4 IMT and PMT Proficiency ExemptionsWith respect to the 269 IMT and PMT proficiency exemption applications, these exemptions were sought in connection with a Registered Representative (“RR”) seeking to add portfolio management services to his/her IIROC approval or, in a small number of cases, an individual applying for new registration to be an RR conducting portfolio management services.

In the vast majority of cases, the individual held the Canadian Investment Manager (CIM) designation or the relatively newer Chartered Investment Manager (CIM®) designation issued by the Canadian Securities Institute (CSI). Attaining either of these designations qualifies an individual for registration as an “advising” or “associate advising representative” with a firm registered as an adviser (portfolio manager) under National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations.

Re: This is a complaint about systemic methods by which the many Provincial Securities Commissions violate and/or “exempt” Provincial Securities Act laws for the benefit of investment firms who pay the salaries of Securities Commission employees. This is costing Canadians billions of dollars each year. This has gone on for decades without attention. It is doing irreversible harm to our economy and our society.

Mr. Goodale,

I write to you about an issue of abuse. Financial abuse by financial institutions which is affecting all Albertans, individuals, municipalities, Universities, retirement plans, pension funds.

It also illustrates where the various Provincial Securities Commissions are failing in their mandate to PROTECT Canadians.

Example #1 Securities Commissions ignore public protective laws of the Securities Act at a cost to Canadians, to institutions such as the Alberta Treasury Branch, Alberta municipalities, Universities, Public Service Pension Plan of Canada etc.

Example #2 Securities Commissions routinely and regularly grant “exemptive relief” from Securities laws, with NO public notice, NO warning, nor public input into the reasons or the risks. This also has the effect of costing Canadians billions while benefitting investment product sellers.

Further to Example #1 the Commissions are wilfully blind to thousands of industry registrants who are legally registered in the capacity of “dealing representative” (formerly called salesperson’s or known as “brokers”). Thousands of such product sellers who owe no legal fiduciary duty to protect investors are flaunting Securities Act laws and calling themselves by another, separate license category. This is contrary to the Alberta Securities Act, Ontario Act, BC,and so on, while these agencies turn a blind eye and ignore enforcement of these laws.

This has the effect of misrepresenting a financial person who DOES NOT have to place the interests of the investor first, as someone who DOES place the interests of investor’s first.

This is tantamount to a fraudulent misrepresentation and is a failure to follow Alberta law (section 100).

This is like a person referring to themselves as a “doctor” without having the proper license, qualifications, or protective obligations (the “do no harm” oath) to the public.

It is an illegal activity as well as an immoral one, and yet the ASC acts wilfully blind to this common practice which has the effect of deceiving millions of consumers and investors.

The City of Lethbridge is missing nearly $30 million dollars after taking financial “advice” from one such person, who was legally licensed as a “salesperson”, while representing himself illegally as an “advisor”. Millions of other Albertans face this same deception every day with their life savings. Hamilton Ontario took a 90 million dollar hit due to this illegality. The pension for Judges and RCMP officers (PPSP) lost $2 billion during the collapse a number of years ago.

The total harm to Canada was just over $30 billion, making it one of the largest, (and most successful robberies in Canadian history).

This is akin to allowing financial firms, with the aid of regulators, to pick the pockets of Canadians on a regular and repeated basis.

I ask specifically that the government require all Securities Regulators to correct, or be held accountable to Canadians for being unwilling or unable to protect Canadians from thousands of these misrepresentations, contrary to Provincial Securities Acts.

Example #2 is the Commissions granting “exemptive relief” (permission to NOT have to follow Securities Acts). This occurs up to 500 or more times in some years, and is done in a near-silent-to the public fashion. Members of the public are not informed when investment products they may purchase have been sold without the full protections of laws. There is usually no public notice given, nor ability for the public to be informed, to provide input, or to protest these seemingly one-sided “deals”.

Securities Commissions most-oft used statement to justify these “exemptions” to laws is just the following,

“each of the decision makers, is satisfied that the conditions required to make the decision, has been met”.

This is government gobbledygook and is indicative of the arbitrary, haphazard, and reckless manner in which the fundamental protective laws of financial protection are being flaunted by Securities Commissions in Canada.

, and in appalling example of self dealing by the banks, at harm to clients.

Other examples include

allowing investments without proper ratings and safety, to be sold, which has resulted in billions of dollars being lost to consumers, investors, cities, towns, universities, pension funds

and so on. These exemptions to our laws benefit the investment industry while allowing illegal, risky or unsafe products to be dumped off the books of investment sellers and onto the backs of unsuspecting consumers.

These acts of willful blindness to laws, and secret permissions to allow intentional violations of laws are contrary to the protective intentions of the Securities Commissions

, and I again ask to be investigated thoroughly, by a full review of these agencies, and the proper changes put in place to ensure professional, and ethical protection of Canadian’s life savings. I would also like to be allowed to present information and answer questions of any government review of agencies such as the Securities Commissions.

The following captured image (from an Ontario Government report into the Ontario Securities Commission (2011?) is illustrative of how provincial Securities Commissions in Canada fail in their public protective functions and cost the country billions. The loss to Canada (and gain to those the OSC, ASC etc., regulate) was in the neighbourhood of $35 billion dollars and is considered to be Canada’s largest financial crime/loss to date.

It must be pointed out, that in addition to the points listed below, that provincial Securities Commissions actually granted “exemption from the law” to allow these “investments” to be sold to Canadians. They did this, as always, in semi-secrecy, with no warning to investors or to the public. Just who does the provincial regulator serve? It is NOT protecting the public.

Link to a 6 minute video about the "advisor" title misrepresentation, in a humorous attempt to engage public protection and awareness: https://youtu.be/xoLiM40SD7k

Re: This is a complaint about systemic methods by which the Alberta Securities Commission (ASC) is violating and/or “exempting” Alberta Securities Act laws for the benefit of investment firms who pay the salaries of ASC employees. This is costing Albertans billions of dollars. This has gone on for decades without attention.(this letter and several hundred examples found behind it and within this public forum demonstrate a recidivist record of blatant disregard for the protection of Albertans by the Alberta Securities Commission)

Rachel,

I write to you about an issue of abuse. Financial abuse by financial institutions which is affecting all Albertans, individuals, municipalities, Universities, retirement plans, pension funds.

It also illustrates where a government agency, the Alberta Securities Commission is failing in it’s mandate to PROTECT Albertans from financial abuse by financial professionals.

Example #1

The Alberta Securities Commission ignores public protective laws of the Alberta Securities Act at a cost to Albertans, to Alberta institutions such as the Alberta Treasury Branch, Alberta municipalities, Universities etc.

Example #2

Alberta Securities Commission routinely and regularly grants “exemptive relief” from Alberta Securities laws, with no public notice, no warning, nor public input into the reasons or the risks. This also has the effect of costing Albertans millions while benefitting investment product sellers.

Further to Example #1 the ASC is wilfully blind to thousands of industry registrants who are legally registered in the capacity of “dealing representative” (formerly called salesperson’s or known as “brokers”). Thousands of such product sellers who owe no legal fiduciary duty to protect investors are flaunting Alberta laws and calling themselves by another, separate license category. This is contrary to the Alberta Securities Act, while the ASC turns a blind eye and ignores enforcement of this law.

This has the effect of misrepresenting a financial person who DOES NOT have to place the interests of Alberta’s first, as someone who DOES place the interests of Alberta’s first. This is tantamount to a fraudulent misrepresentation and is a failure to follow Alberta law (section 100).

This is like a person referring to themselves as a “doctor” without having the proper license, qualifications, or protective obligations (the “do no harm” oath) to the public. It is an illegal activity as well as an immoral one, and yet the ASC acts wilfully blind to this common practice which has the effect of deceiving millions of consumers and investors.

The City of Lethbridge is missing nearly $30 million dollars after taking financial “advice” from one such person, who was legally licensed as a “salesperson”, while representing himself illegally as an “advisor”. Millions of other Albertans face this same deception every day with their life savings.

I ask specifically that the government require the ASC to address, explain, correct, or be held accountable to Albertans for being unwilling or unable to protect Albertans from thousands of these misrepresentations, contrary to Section 100 of the Alberta Securities Act.

Example #2 is the ASC granting “exemptive relief” (permission to NOT have to follow Alberta law, the Alberta Securities Act). This occurs up to 500 or more times in some years, and is done in a near-silent-to the public fashion. Members of the public are not informed when investment products they may purchase have been sold without the full protections of Alberta laws. There is usually no public notice given, nor ability for the public to be informed, to provide input, or to protest these seemingly one-sided “deals”.

The ASC most often used statement to justify these “exemptions” to our laws is just the following statement,

“each of the decision makers, is satisfied that the conditions required to make the decision, has been met”.

This is government gobbledygook and is indicative of the arbitrary, haphazard, and reckless manner in which the fundamental protective laws of Alberta are being flaunted by this agency.

Examples include allowing banks to dump poorly performing investment under-writings (slow selling investment products) into the mutual fund holdings of bank customers, without notice, and in apparent conflict of interest. (advantages to banks, disadvantages to clients).

Other examples include allowing investments without proper ratings and safety, to be sold, which has resulted in billions of dollars being lost to consumers, investors, cities, towns, universities, pension funds and so on. These exemptions to our laws benefit the investment industry while allowing illegal, risky or unsafe products to be dumped off the books of investment sellers and onto the backs of unsuspecting consumers.

These acts of willful blindness to Alberta laws, and secret permissions to allow intentional violations of Alberta laws are contrary to the protective intentions of why the Alberta Securities Commission was established, and I again ask to be investigated thoroughly, by a full review of this agency, and the proper changes put in place to ensure professional, and ethical protection of Albertan’s life savings. I would like to be allowed to present information and answer questions of any government review of agencies such as the Alberta Securities Commission.

The following captured image (from an Ontario Government report into the Ontario Securities Commission (2011?) is illustrative of how provincial Securities Commissions in Canada fail in their public protective functions and cost the country billions. The loss to Canada (and gain to those the OSC, ASC etc., regulate) was in the neighbourhood of $35 billion dollars and is considered to be Canada’s largest financial crime/loss to date.

It must be pointed out, that in addition to the points listed below, that provincial Securities Commissions actually granted “exemption from the law” to allow these “investments” to be sold to Canadians/Albertans. They did this, as always in semi-secrecy, with no warning to investors or to the public. Just who does the provincial regulator serve? It is NOT protecting the public.

I am sorry to hear of your loss. The forum at http://www.investoradvocates.ca is for investment professionals to share information that might be of help to the public. As you can see from the list below, there are a large number of losses just in the area of exempt market products.

We feel that the ASC as securities regulator is responsible for their mandate of public protection, and is failing in this area.

I urge you to join the Facebook group titled "albertafraud" which is an area where open discussion can take place, and the power of social media may work to help abused and victimized investors. There have been a couple of times to my knowledge in Canada, where investors have had success in pressuring the government to pay back investors, and live up to their promised role as protectors of the public, and in both of the examples I know of the victims were able to use Facebook and other means to build strength in numbers.

Here is the mission statement for a group which is trying to organize and effect change to the system. I am sorry to not have better news for you at this time, but our opinion remains that nearly every person or agency in Canada, which is paid a salary and claims to "protect" investors, is either paid and captured BY the industry, or cooperating and respecting the authority of the industry, even when they act in a criminal manner, or simply asleep at their jobs. That kind of failure takes each and every one of us, if it is to change.

1. Albertans require investment regulation and protective rules which do not act against the public. The Alberta Securities Commission has acted contrary to the public interest and has allowed investment sellers to repeatedly breach securities laws that exist to protect Albertans. Victims of systemic regulatory misconduct deserve their money back through Alberta Finance and Enterprise, the legislated department responsible for the conduct of the Securities Commission, if recompense is not found in the investments themselves.

2. The public requires an investor protection agent which solely protects the interests of the public. The Alberta Securities Commission does not. Albertans deserve public protection not designed to allow mandate dilution, or corruption through financial (or other considerations) connections to the industry, political appointments, or cronyism.

3. Albertans expect the Criminal Code of Canada to be the guiding principles by which regulators, prosecutors and police protect investment and financial markets. “Self Regulation” and self-policing of investment fraud and misconduct is not serving the public. It is allowing corruption and self serving behaviors to grow.

4. Albertans deserve a full public inquiry, under the Provincial Inquiries Act, into systemic failures, connections, corruption and actions known to be contrary to the public interest, and the resulting damage to Albertan’s from negligence, gross negligence, misfeasance, or conscious wrongdoing at the Securities Commission.

I hope to hear from you again, and we look forward to working with you if you are interested in positive change in the protection of investors in Canada. If successful, we might, (just might) run across the proper avenue by which to cause compensation for people who are abused by an industry seemingly run wild.

It's reviews appear to support the premise that bankers, regulators and the politicians who are in charge of the regulators have conspired to create the perfect money machine for themselves.........and the perfect storm for the public. The economy at the moment bears that out.

What is unable to come out through this film is that Canada is more deeply incestuous in the relationship between the bankers and the regulators. Politicians I know less about, but Alberta's finance minister should properly be called a finance monster in my opinion.

In fact I could see some like him charged with Breach of Trust for what damage he allows to happen to the public.Someday perhaps.http://www.breachoftrust.ca